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Professional liability insurance: Essential protection for service providers

Professional liability insurance shields service firms from claims of breach, errors, or delays, ensuring financial stability and contractual security.

09/03/2025 · 6 minute read

The future and financial stability of professional services firms depends strongly on their ability to deliver the services outlined in their contracts, engagements, and agreements. But a number of issues, sometimes outside of the firm’s control, could result in alleged breaches that eventually lead to litigation and potential financial losses.

Professional liability insurance — also known as errors and omissions (E&O) coverage — provides professional firms like yours with critical protection for claims arising from any act, error, omission, or negligence in the performance of those services. 

Key risks for professional services firms

All entities that provide services may face a number of claims due to breach of contract. These include:

  • Failure to perform services. Clients may seek compensation when a contracted service is not delivered as promised.
  • Delayed service delivery. Late delivery of services can lead to client dissatisfaction and potential claims for financial losses incurred due to the delays.
  • Errors or omissions in services provided. Clients may hold firms accountable for the consequences of mistakes or inaccuracies in services, potentially leading to claims.
  • Unmet customer expectations. Professional services firms may face claims when services are not in line with contractual agreements.

Why should you consider professional liability coverage?

Professional liability insurance is designed to protect your firm for third party financial losses, allowing you to focus on fulfilling your contractual obligations without the fear of potentially devastating financial repercussions. 

Professional liability insurance provides you with:

  • Contractual security. Some entities may be contractually required to purchase professional liability insurance as a condition of doing business.
  • Balance sheet protection. Claims are expensive to defend. Professional liability insurance provides you with support for litigation expenses.
  • Subcontractor exposure relief. Your clients may hold you responsible for the work of any subcontractors, leading to claims if these services did not meet contractual requirements.

Note that other insurance policies may exclude liability arising from professional services, or only cover losses arising from bodily injury and property damage, not financial loss. Most other insurance policies specifically exclude breach of contract claims.

Which companies would benefit from a professional liability policy?

Professional liability coverage is essential for professions that provide services to clients and want to transfer their risk of liability resulting from the performance of or failure to perform these services. These include:

  • Consultants
  • Business advisors
  • Licensed professionals
  • Real estate agents, property managers, project managers
  • Third party administrators
  • Debt collectors and billing services
  • Security services
  • Staffing companies

How can Marsh help?

Our Miscellaneous Professional liability team works closely with organizations like yours to develop tailored insurance programs that address your unique circumstances. Our dedicated team works with businesses across multiple industries to help you evaluate your risks and secure the insurance that best aligns with your risk profile. 

Key benefits of working with Marsh include:

  • Industry expertise. Our team possesses deep knowledge of the evolving risks that professional service firms face, allowing us to provide you with strategic risk management solutions. We work with you to determine the most appropriate risk strategies and solutions, tailoring them to fit your specific needs and objectives and helping you navigate a wide range of challenges.
  • Tailored approach. We will work with you to understand your contractual obligations and tailor your policy so that it provides you with the most suitable coverage.
  • Global reach. We work closely with Marsh’s multinational team to provide global support and coordinate the placement of locally admitted insurance.
  • Claims advocacy. Our team provides you with support before, during, and after a loss. Our specialized claims specialists have the knowledge and experience to help you manage even the most complex and potentially contentious claims. 
  • Claims resolution assistance. Our specialists’ familiarity with the insurance industry and strong relationships with senior leaders in the commercial insurance space allow us to provide you with critical expertise that can help you resolve claims across all lines of coverage.

To learn more about how a professional liability policy can help protect your company, speak with a Marsh representative.

Contact us

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